Hong Kong Treasury Bureau: Will soon publish the consultation summary of the proposed regulatory regime for stablecoin issuers

The Financial Services and the Treasury Bureau of Hong Kong stated that following the implementation of the licensing system for virtual asset service providers in June last year, the Financial Services and the Treasury Bureau and the HKMA consulted the public on the proposed regulatory system for Hong Kong stablecoin issuers at the end of last year, and will soon publish a consultation summary to prepare a draft bill for the Legislative Council to review. Given the important role of fiat stablecoins in the Web3 and virtual asset ecosystems, and the increasingly close connection between the traditional financial system and the virtual asset market, the government needs to establish a regulatory system for fiat stablecoin issuers, the main requirements of which include: reserve management and stability mechanisms, including requiring issuers to ensure that fiat stablecoins are fully backed by high-quality and highly liquid reserve assets; redemption requirements; and regulatory requirements such as governance, knowledge and experience. At the same time, in order to protect users of fiat stablecoins, it is recommended that only the following institutions can sell fiat stablecoins in Hong Kong or actively promote related services to the public in Hong Kong, including licensed fiat stablecoin issuers, banks, licensed corporations, and licensed virtual asset trading platforms. For existing stablecoin issuers, the proposed regulatory system will also have corresponding transitional arrangements.